Business Essentials for Professionals


Fiat Chrysler To Settle SEC Charges Of Fudging Car Sale Numbers For $40 Million Fine

Fiat Chrysler To Settle SEC Charges Of Fudging Car Sale Numbers For $40 Million Fine
Charges against Fiat Chrysler of allegedly lying for years to its investors about the number of cars it was selling will be settle after the auto company agreed to pay a $40 million fine.
According to a statement from the United States Securities and Exchange Commission (SEC), a data base related to unreported sales which was known internally with the company as the "cookie jar" was used by the car maker to fudge sale figures that was officially published between 2012 and 2016.
According to the settlement deal, Fiat Chrysler has agreed not to either accept or deny that had done any wrongdoing. However the SEC claimed that Fiat Chrysler had made false public claims that it had managed to achieve a sustained period of growth in sales but when in reality, the monthly sales growth that the company had been touting as its achievement was in fact completely false and a myth.
"The SEC's order finds that [Fiat Chrysler] inflated new vehicle sales results by paying dealers to report fake vehicle sales," said the agency. A data base of the actual number of vehicles that it sold every month was created and maintained by the automaker but was never made public, the SEC alleged. "In months when the growth streak would have ended or when [Fiat Chrysler] fell short of other targets, [Fiat Chrysler] dipped into the 'cookie jar' and reported old sales as if they had just occurred."
Fiat Chrysler had included in its care sale report about 7,000 cars that it had listed in cookie jar in its September 2013 sale number -0 which was the time when the company started reporting strong growth in sale, said the settlement order filed by the SEC. It also said that the company also listed in its sold list about 12,000 cars from the cookie jar list pr the unsold cars data in May of 2016 and reported that in its public documents which was about the end of the period when the company had claimed high monthly growth in sales.
And by the summer of 2016, the company eventually claimed that it has recorded improved year-over-year sales for over a period of 75 months or just a little more than 6 years. According to the SEC order in the case, the company had boasted that the continued sale growth was "not an inconsequential feat" and "a symbol of our continuing success in the marketplace."
Reports in the media that appeared during the period of the high growth of monthly sale for the company described it as "a stunning record," "jaw-dropping," and "incredible", the SEC said citing those reports.
There was a very short and concise statement issued by the company about the settlement, saying that it "has reviewed and refined its policies and procedures and is committed to maintaining strong controls regarding its sales reporting."
It was in the early part of 2016 that the first reports about the fudged monthly sale reports emerged following the filing of a federal lawsuit against Fiat Chrysler by two Chrysler dealers. In the case, the suitors alleged that the company had asked the dealers to file false reports of sale of dozens of vehicles on the last day of the month and to later back out of undo the sales on the very first day of the next month.

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc